Will business owners get better banking soon?

Whilst everyone waits anxiously to see whether we can navigate out of the current mess in banking there has so far been precious little that indicates things are really going to be different ‘afterwards’, whenever that is. The most obvious example is that banking bonuses clearly will stay the same unless legislation is attempted. We’re witnessing how practically difficult that might be. What of the business banking that matters to the entrepreneur though? That too has complications. The big bank likely to take radical action is RBS. Formerly run by Britain’s most admiredbanker Sir Fred Goodwin it is now ‘controversially’ run by Stephen Hester. I say controversially because apart from his shocking compensation package (after all he won’t be hanging around to end of contract will he and could do it for nothing and reap glory couldn’t he?) he also has to find a ‘Plan B’. His Plan A was to cut back to the UK core banking position but that doesn’t seem to anticipate the strength of feeling at large towards banks. That feeling is driving a political agenda that surely will demand a restructuring of their UK business. Oops! Need a new vision chaps. His career shows definite flair for leadership but if the plan lacks substance don’t we just get another personality cult? The Telegraph might have anticipated this:

“If there is a possible weakness in Mr Hester’s business approach it could be with his political skills. Taking over a partly – possibly fully – nationalised bank will require immense diplomacy in dealing with civil servants and ministers. Although he is known for his support of transparency and openness, Mr Hester is also famed for the way he dominates meetings, imposing his will as much by force of personality as intellect. Having politicians and civil servants, some of whom may be on his new board, as paymasters rather than private shareholders will present an altogether different challenge.”

Meanwhile we are getting snippets of what might emerge in the gaps left by rudderless big banks. Sandy Chen is looking to set up a new bank, albeit with small capital to start with. There could be great chunks of commercial banking oprations to pick up or prey on, not least RBS. Naturally, Richard Branson is also said to be thinking of having a go but then again he would wouldn’t he?

So far it is hard to see a logic whereby entrepreneurs can really expect banking to improve – at some level of course modern credit-scoring plus market segmentation lead to rational ‘abandonment’ of smaller and medium sized clients. At another though, given the disruption afoot, now is the time for business owners to make their needs clear: get your bankers to pitch for business and regularly consider switiching around until and unless you see real added value beyond the commodity service. No more Mr Nice Guy!